Here’s definitive proof that the guy intended it to be a racist message, courtesy of Jalopnik.
It includes his Facebook page (since taken down) along with a post under a screen name he identified as his confirming exactly that which he had denied.
How the First Amendment applies to the regulation of vanity license plates is actually a pretty complicated legal topic, even by First Amendment standards. There are at least four big open questions:
(1) Is it government or private speech? See Kahn v. Dep’t of Motor Vehicles, 20 Cal. Rptr. 2d 6, 10 (Cal. Ct. App. 1993); * Lewis v. Wilson*, 253 F.3d 1077, 1079 (8th Cir. 2001); Perry v. Smith, 280 F.3d 159, 166 (2d Cir. 2001); Sons of Confederate Veterans, Inc. v. Holcomb, 288 F.3d 610, 621 (4th Cir. 2002). * But see* Higgins v. DMV, 13 P.3d 531, 547 (Or. App. 2000) (en banc) (“We believe that the proper course is to view the communication that occurs on state license plates, including custom plates, as state communication rather than as communication by the plate holders or a combination of both.”).
(2) If it is private speech, is there a viewpoint neutral justification? Some states argue for a kind of offensiveness test related to driver safety. Basically, if your plate is likely to cause road rage, they can veto it. IMHO, this is a so-called Heckler’s Veto, which First Amendment doctrine has frowned upon. But it is anything but clear-cut.
(3) Is a license plate a public forum, or a nonpublic forum? Most likely, a nonpublic forum, but there isn’t unanimity on this question. See Kahn, 20 Cal. Rptr. 2d at 10 (finding vanity plate program in California to be nonpublic forum, with restrictions on speech subject only to requirements of reasonableness and viewpoint neutrality).
(4) If it is a nonpublic forum, is the restriction reasonable? And it might be, given the availability of alternative speech that has the same effect (i.e. bumper stickers). But this too is a close call, depending in large part on the government’s asserted rationale.